Building a Sturdy Business
Top 5 Risks for Contractors, Builders & Other Construction Professionals

Top 5 Risks for Contractors, Builders & Other Construction Professionals

Owning a small construction or contracting business is a dream for many people. What's better than using nifty tools, being your own boss, and creating practical, beautiful spaces where people can live and work?

The things that make the industry appealing, though, can also pose some serious risks. Let's take a look at the top five risks that threaten to turn a construction or contracting business owner's dream into a nightmare:

1. Seasonal slowness

1. Seasonal slowness

You might know the old joke that goes, "There are only two seasons in [your city]: winter and construction." If your construction business is located anywhere other than the warmest locales of North America, you likely know the dramatic slowdown that happens every winter. It's hard to dig into frozen soil, and nobody wants to drop tools into two feet of snow or climb skyscrapers in high freezing winds.

Even if you do live and work in a warmer climate, economic downturns can turn an otherwise normal work season into an extended vacation as contracts dry up and developers struggle to recoup losses. As a construction or contracting business owner, you have to be prepared for less work during these times, which means saving up to cover expenses.

Unfortunately, lawsuits don't ebb with seasonal dips. Make sure you have the proper coverage year round so you have the resources to handle legal trouble without draining your savings.

2. Equipment damage

2. Equipment damage

A contractor's tools are their livelihood. Without your equipment, the job simply can't get done. Some tools can be quickly and easily replaced, but for those that can't, a Property Insurance policy can be a lifesaver. (If you move frequently from jobsite to jobsite, equipment in transit can be covered against loss, theft, or damage by an Inland Marine Insurance policy.) Additionally, be sure to train workers on how to use, maintain, and store equipment to prevent damage.

3. Injuries to third parties and workers

3. Injuries to third parties and workers

No matter how hard you strive to create a safe work area, a construction site is a dangerous place full of potential hazards. This can be especially true for people unfamiliar with safety rules, such as clients who are visiting the worksite. Even veterans of the construction industry can be hurt on the job, including your employees.

For this reason, always enforce safety regulations and train your crew on worksite safety to minimize the risk of injury. If an accident does happen, your business can be liable for covering medical expenses and court fees. General Liability Insurance can help protect you in case a client or other third party is injured, but if one of your employees gets hurt, you'll need Workers' Compensation Insurance. Construction professionals are required to carry this coverage in most states, even if they don't have employees.

4. Faulty work

4. Faulty work

A construction business may be liable for finished projects that are structurally unsound, not up to code, or faulty in some other way. If your work doesn't comply with local, state, and federal building regulations, your client could lose money and look to you for reimbursement.

Complying with building codes and safety standards is the best way to prevent this. Obviously, no one wants a reputation of doing poor work. Luckily, carrying a License and Permit Bond demonstrates that your business follows building regulations. If a mistake slips past you, your client can make a claim on your bond, and your surety provider can cover the damages. However, unlike other insurance policies, you must pay back any amount your provider pays toward the claim.

5. Missed deadlines

5. Missed deadlines

There's a reason school teachers enforce due dates for homework. People in the business world expect projects to be done on time.

In the construction industry, though, any number of unforeseen obstacles can prevent a project from being completed on schedule. Building materials can be delivered too late, tools can break, and plans might have to be redrawn entirely if something unexpected is discovered.

To minimize the impact of missed deadlines, keep the lines of communication open with your client. If you must push a deadline back, fill them in immediately, and amend your contract to reflect the new dates.

Protect Your Construction or Contracting Business

Protect Your Construction or Contracting Business

With the proper training, foresight, and insurance protection, your dream business can successfully navigate risks and continue to grow. Contact an insureon agent today to discuss which kinds of coverage are appropriate for your construction or contracting business.

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